- Under Armour executives told analysts the company plans to shed about 2% of its workforce as part of a restructuring plan that followed a second quarter loss to shareholders, according to a CNBC report.
- The shoe and athletic apparel seller reported revenue of $1.1 billion for Q2, an increase of 9% compared to the prior-year period, according to a company release. Of that, wholesale revenue was $655 million, a 3% jump from Q2 last year, and direct-to-consumer revenue rose 20% to $386 million. For the year, Under Armour lowered its expectations for revenue growth to between 9% and 11%, down from previous guidance of 11% to 12%.
- Under Armour’s gross margin fell 190 basis points to 45.8% in Q2 as inventory management initiatives cut into profits from its channel and product mix. Investments in Under Armour’s direct-to-consumer footwear and international business led to an increase of 10% in the company’s corporate costs. Under Armour saw a $5 million operating loss for the quarter and a net loss of $12 million, or 3 cents per diluted share.
Under Armour Chairman and CEO Kevin Plank said in a statement Tuesday that his company's restructuring plan is meant to “meaningfully increase” the athletic brand’s go-to-market speed and “amplify our digital capabilities.” All said, it will cost the company up to $130 million in severance, lease termination and other costs.
Anthony Riva, analyst at GlobalData Retail, described Under Armour’s Q2 performance as a "downbeat set of numbers from the once mighty Under Armour," in comments emailed to Retail Dive.
"There can be little doubt that many of the favorable dynamics that previously powered the brand's success have turned sour," Riva said. "In so doing, they have left the company and its operational structure exposed, resulting in an uncharacteristic net loss of $12.3 million."
Riva points out that Under Armour’s North American sales — the “main engine of growth" for the company — have stalled as the sports apparel market has become heavily discounted. But Riva doesn’t let the company off the hook by attributing the slowdown entirely to market dynamics. He also argues that Under Armour’s brand “does not have the clarity or a sense of purpose in the way that Lululemon or even Nike does."
The employee cuts announced Tuesday follow executive shuffling at Under Armour as the company seeks a new path forward in a tougher North American market. In June, Under Armour announced it had hired Patrik Frisk, previously the CEO of The Aldo Group, as president and chief operating officer. The move restored the executive position at the company, which had divided those duties up among the CFO and other executives after CFO/COO Brad Dickerson announced his departure in 2015. Also earlier this year Paul Fipps, previously chief information officer, was named chief technology officer, and Colin Browne, previously president of global sourcing, was named chief supply chain officer.